Chancellor Philip Hammond has warned it is "theoretically conceivable" flights to Europe from the UK could be grounded if Britain leaves the EU without a Brexit deal.

As part of ongoing exit negotiations, the UK is hoping to replicate existing rights for air carriers to fly within Europe.

Appearing before MPs at the House of Commons' Treasury Select Committee on Wednesday, Mr Hammond raised the prospect of no air traffic agreement being struck if Brexit talks collapse - although he suggested "mutual self-interest" would see flights continue.

"It is theoretically conceivable in a no-deal scenario there will be no air traffic moving between the UK and EU on 29 March, 2019," the Chancellor said.

"But I don't think anybody seriously believes that is where we will get to."

Video:Hammond's 'no air traffic' Brexit worst case scenario

Mr Hammond spoke as he was quizzed over whether the Treasury will authorise spending to enable Whitehall departments to prepare for Britain leaving the EU without a departure deal.

He said the Government will need to "determine what is a realistic worse case scenario that we need to plan for and invest for".

But, on the prospect of a no deal outcome affecting airlines, Mr Hammond added: "On that specific point, it's very clear that mutual self-interest means that even if talks break down, even if there is no deal, there will be a very strong compulsion on both sides to reach agreement on an air traffic services arrangement."

Mr Hammond also used his committee appearance to send a message, likely aimed at disgruntled Brexiteers, that no contingency cash to prepare for a no deal Brexit would be committed "earlier than necessary just to make some point".

Ramping up the threat that talks could fail, the Chancellor warned that the UK should brace for a "bad-tempered breakdown in negotiations".

And challenged over concerns in the financial sector, the Chancellor claimed "certainty itself" was better than "getting the perfect outcome".

He also revealed £250m had already been earmarked for some departments to work on a no-deal scenario.

Later, Theresa May announced in PMQs the money will be spread between the Home Office, HMRC, Department for International Trade and DEFRA.

Mr Hammond's comments came as a new Sky Data poll revealed nearly three-quarters (74%) support the Government's position that no deal is better than a bad deal on Brexit.

Out of 1,023 respondents, only 26% said they believed any deal with the EU is better than no deal.

Treasury committee member and Labour MP Wes Streeting said Mr Hammond had admitted that "spending money preparing for a damaging no-deal Brexit will leave our crumbling public services short of funds".

He added: "Philip Hammond's heart isn't in this because he, unlike many in his party, at least recognises the terrible risks and pitfalls Brexit has left this country vulnerable to."